Existing home sales hit fastest pace since November 2009

John Raoux/APExisting home sales rose 5.1%, more than expected, to an annualized pace of 5.35 million.

This is the fastest pace of sales since November 2009.

Expectations were for the report to show home sales rose 4.8% in May to an annualized rate of 5.28 million, up from a pace of 5.04 million in April. April's sales rate was revised up to 5.09 million on Monday.

With Monday's report, existing home sales have now risen against the prior year for 8 straight months. In May, existing home sales were up 9.2% against last year.

In its report, the National Association of Realtors noted that the increase in home sales on Monday was fueled partly by an increase in first-time buyers, who represented 32% of existing home buyers in May.

"The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low downpayment programs," said Lawrence Yun, chief economist at NAR. "More first-time buyers are expected to enter the market in coming months, but the overall share climbing higher will depend on how fast rates and prices rise."

The report also indicated that 24% of all transactions were cash sales for the third straight month, and down from 32% a year ago.

The NAR added: "With demand continuing to far exceed supply, properties typically stayed on the market for 40 days in May, up from April (39 days) but the third shortest time since NAR began tracking in May 2011."